Shahid Javed Burki: South Asia's Whispering Enemies

ISLAMABAD - The leaders of the member countries of the South Asian Association for Regional Cooperation (SAARC) met last week in the Maldives for their 17th annual summit. Previous SAARC summits achieved little in the way of regional cooperation. If they are remembered at all, it is for the progress made in getting India and Pakistan to talk to each another. While this time was no different, there are growing signs of a thaw in relations.

Improvement in the India-Pakistan relationship - the main obstacle to greater economic cooperation in South Asia - has come whenever the two countries' governments have agreed to work together to achieve a common good. That happened in 2004, when, after agreeing to initiate what they called a 'composite dialogue' that would cover eight issues that had kept them apart for decades, India and Pakistan also agreed to work towards the creation of the South Asia Free Trade Area (SAFTA). Without such limited agreements, stasis in South Asia is the rule.

SAFTA was launched in July 2006, but it did little to increase trade between India and Pakistan, which has barely developed since 1947, when the two countries fought the first of many trade - as well as real - wars against each other. In November 2008, after a group of terrorists attacked Mumbai, India's financial center, India accused Pakistan of involvement in the attack and suspended all dealings with its neighbour. The composite dialogue was put on hold, with both sides unable to cast off the heavy burden of decades of hostility and intense rivalry.

Nevertheless, bilateral relations have warmed slightly over the past 18 months. The process began at a meeting in Bhutan between Prime Minister Manmohan Singh of India and Yousaf Raza Gilani, his Pakistani counterpart. India agreed to begin talking again with its neighbour, accepting Pakistan's argument that it, too, was a victim of terrorism. Since that meeting, the two countries' prime ministers have met four times, always on the sidelines of international gatherings. Their foreign ministers have met three times, and their commerce ministers once.

The Indians agreed to resume the suspended dialogue with Pakistan, despite the failure fully to resolve the Mumbai attacks legally, as well as Pakistan's inability or unwillingness to move against the two domestically-based terrorist groups that India had accused of having masterminded those and several other attacks on its territory. The most important outcome of these renewed contacts was the Pakistani cabinet's decision, on November 2, to grant India most-favored-nation (MFN) status in trade relations.

Under the rules of the World Trade Organisation, MFN status should have been given after both countries became members. India granted Pakistan MFN status in 1996, but Pakistan held back, hoping to win concessions from India on the unresolved issue of Kashmir.

That, of course, did not happen, and Pakistan has at last changed its mind. What that implies is that trade with India will be conducted according to the same set of regulations and tariffs that govern other countries' trade with Pakistan.

India responded to Pakistan's gesture by supporting its bid for membership of the United Nation's Security Council, and by withdrawing its objections to the European Union's grant of special privileges to Pakistani textile exporters. So the Maldives SAARC meeting offered an opportunity for further easing of tensions.

The summit started with a one-on-one meeting between the two countries' prime ministers. After an hour together, they emerged to tell the press that no new steps aimed at improving relations had been agreed upon. Gilani did, however, say that they had 'discussed all core issues, including Kashmir,' and that they 'hope the next round will be more constructive, more positive, and will open up a new chapter in the history of both countries.'

Given that Pakistan's relations with the United States are arguably at an all-time low, Pakistani leaders seem determined to lower the temperature on its disputes with other global powers, particularly India. Gilani extended another invitation to Singh to visit Pakistan. Singh, in keeping with past practice (he has received at least six invitations from various Pakistani leaders, starting with then-President Pervez Musharraf), remained non-committal, but showed warmth towards his Pakistani counterpart. 'I always regard Gilani as a man of peace, and every time I meet him my belief is further strengthened,' he told the press.

More was expected from the SAARC summit than was achieved, owing in large part to the unmet expectations for the meeting between the Indian and Pakistani prime ministers on the sidelines of the main event. The 'Addu Declaration,' issued after the conclusion of the meeting, promised small moves by the eight SAARC member states, rather than a breakthrough on matters such as the settlement of trade disputes, granting of transit rights, and encouragement of cross-border investments.

Enduring hostility between India and Pakistan, the region's largest economies, remains the key barrier to such a breakthrough. Neither Gilani nor Singh was certain of domestic public support for further warming of relations, so they played it safe, rather than displaying the bold leadership that the occasion demanded.

Shahid Javed Burki, former Finance Minister of Pakistan and Vice President of the World Bank, is currently Chairman of the Institute of Public Policy, Lahore.